Public Bill Committee

[Mr Jim Hood in the Chair]

Clause 11

Amendment proposed (this day): 3, in clause11,page6, line22,leave out ‘the company’s’.—(Mr Weir.)

Question again proposed, That the amendment be made.

Jimmy Hood: I remind the Committee that with this we are discussing the following:
Amendment 4, in clause11,page6,line22,at end add
Amendment 33, in clause11,page6,line26,at end insert
Amendment 36, in clause11,page6,line26,at end insert
Amendment 37, in clause11,page6,line26,at end insert
Amendment 38, in clause11,page6,line26,at end insert
Amendment 48, in clause11,page6,line26,at end insert
Amendment 49, in clause11,page6,line31,after ‘small’, insert ‘and medium’.
Amendment 5, in clause11,page6,line38,at end add
Clause stand part.

Karl Turner: Before the adjournment, I was explaining to the Committee how the amendments provide for a situation whereby both parliamentarians and the public have easy access to information on how the privatised Royal Mail is affecting the post office network, thereby providing transparency and the ability to scrutinise.
I urge the Minister to give amendment 33 strong consideration, as it would ensure that the public, parliamentarians and stakeholders knew exactly where post office services were being provided, rather than simply outlet locations, which may not provide the proper service that the public have become accustomed to and rely on. It is important that the public and Members of Parliament have access to that information on a regular basis. It would allow us to identify service provision black holes and to lobby for alternative provision such as mobile services, a point made very well by my hon. Friend the Member for Llanelli.
Amendment 36 goes further than amendment 33. It calls for the listing of the number of post office services that have ceased to be delivered since the last report, the locations where that has happened, and the reason for the reduction in the service. I understand that the information could be gained by comparing reports year on year, but if we want to provide the public with transparency and accessible information, that should be done by Post Office Ltd. Amendment 36 would ensure that the reasons were outlined for the service reduction since the previous annual report.
Amendment 37 would oblige Post Office Ltd to provide annual information on the number and location of areas being serviced by mobile provision. Again, that is an important amendment. It would allow stakeholders to scrutinise the use of the service and its growth or, indeed, reduction. As my hon. Friend explained, it would give individuals information that they should be entitled to have. It would be helpful for the public, Members of Parliament and stakeholders to have easy access, through the report, to service provision information, and to see exactly how much the service is being used and which areas are served by a mobile service.
Amendment 38 would add another level of transparency to the Post Office report, which is crucial for proper scrutiny of the effect that a privatised Royal Mail is having on the Post Office and the services that it provides. While amendment 36 would enable the public to see where and why services had been reduced, amendment 38 would enable them to see what Royal Mail was doing to address those reductions. Amendment 48 would provide for the introduction of proposed new paragraph (d), which would ensure that the report indicated any changes in the level of utilisation by the universal service provider—at this point Royal Mail—of the post office. This is vital to ensure that stakeholders can see how the universal service provider is using the post office once Royal Mail is sold off.
Finally, amendment 49 seeks to change subsection (3)(c) so that it includes not just small but medium businesses. It is important that medium-sized businesses become part of the report. Medium-sized businesses are reliant on accessing services that post offices provide, and they can have a range of access challenges, in many of the same ways that small businesses do. Medium-sized businesses therefore need to be recognised and included in the Bill. I said at the outset that I did not want to go on too long. I am well aware that the Minister wants to make progress, so perhaps I will conclude.

Edward Davey: Take your time.

Karl Turner: I am grateful to the Minister.

Jimmy Hood: Order. The hon. Gentleman can rely on the Chair to give him advice on processes.

Karl Turner: I am obliged, Mr Hood.
The amendments will provide clearer, more accessible information to the public, Members of Parliament and key stakeholders. If the Government plans come to fruition, and Royal Mail is 90% privatised, with only “at least 10%” owned by or on behalf of employees, there must be greater transparency so the effects of privatisation on the post office network can be easily seen.
The suggested amendments are about making the privatised Royal Mail as transparent as possible, empowering communities and the public, and allowing them easily to understand any changes to the post office service and, indeed, to the provision of the services that I talked about—the services heavily relied on by my constituents and, no doubt, the constituents of Members across the House. For those reasons, I urge the Committee to support the amendments of my hon. Friends the Members for Ochil and South Perthshire, and for Llanelli. I urge the Minister to consider them carefully, and to concede that they are very much in the public interest and, I respectfully submit, helpful to the Government. Before I bring my remarks to a close, I should mention that I very much support the amendments of the hon. Member for Angus as well.

Graeme Morrice: Along with my hon. Friend the Member for Kingston upon Hull East, I support the various amendments tabled by my hon. Friends the Members for Ochil and South Perthshire and for Llanelli. I also support the amendments tabled by the hon. Member for Angus. I do not wish to go too much into the detail of the amendments, as my hon. Friends have ably covered the specifics, and I know that the Minister is desperate to pledge his unswerving support for our proposals, which, as we have said, are there to be helpful to him.
Earlier, I said that the amendments were about accountability and democracy, so it is only right and proper that Parliament should be able to receive and debate the information provided in an annual report, as well as the additional information for which we are asking. Parliament is a legislative body, but it is also there to scrutinise the Executive and to hold to account the decisions and actions of Government. If the Minister was indeed minded to accept our amendments, perhaps that would become his clause IV moment—we will wait and see.
Whether the post office network remains publicly owned or is mutualised, it will hopefully remain a national body providing a valued and valuable public service to our communities. As such, parliamentarians will no doubt wish to retain an interest in its development. Also, public performance reporting of public services is good practice, but for it to be meaningful and add value, comprehensive and robust information must be provided, which is why agreeing to the amendments is essential if the process is to have any value at all. Not least, there is the need to ensure that the £1.34 billion that it is proposed be invested in the post office network—not an inconsiderable sum—is spent wisely; it is public money, after all. It is therefore not unreasonable for Parliament to have the opportunity to consider the progress that the network is making, at least on an annual basis.
Conservative Members this morning expressed concern about the apparent burden that collating that information might place on the business; the hon. Member for Witham raised that point. No one wishes to place an undue burden on anyone, but the Bill already places a duty on the Post Office company to provide myriad pieces of information about its business to the Secretary of State. The template is already there. All we ask is that a little more information be provided.
It is a positive thing for Parliament to consider the ongoing progress of a transforming post office network. This is not about providing for a forum in which to talk down the postal service, as some hon. Members have suggested, but about a real opportunity to engage in the process and add value. There are many good ideas out there about how the interface with the customer can be improved and how more services can be provided.
We have heard myriad good ideas mentioned about creating greater accessibility, particularly in more rural and remote areas, addressing the poverty gap and working in partnership with other agencies, such as the Department for Work and Pensions or local authorities. In my constituency, in the town of Blackburn, West Lothian, where Susan Boyle resides—I am remembering one of my first interventions, when the Chair rightly cut me short—my local authority, when I was its leader, took steps to save the local post office by providing it with the council’s local cash collection function for council tax, rent and other service charges. Doing that created a one-stop shop for a range of pay-in and withdrawal services in that community.
I am sure that there are similar successful models throughout the country. We have heard mention of shops and even pubs providing post office services, but we can go much further as part of a modernisation package. We all, though,need to be part of that process: the post office network, employees, unions, communities and parliamentarians. We all have post offices in our communities and we all have constituents who use them and who have their opinions. If we wish to do our job as elected representatives, we need all that relevant information; we need the opportunity to have an input into, and a say on, the development of a great, cherished national institution that is very much part of the British way of life. Will the Minister allow me, as the elected Westminster MP for my constituents from Dechmont, Breich, Ecclesmachan and Faucheldean—I will not go on—to represent their interests in annual debates on the development and progress of the post office network, as it spends their money?

Edward Davey: Good afternoon, Mr Hood. Members who were here during the morning sitting will have noted the anticipation in the Committee with regard to how I intend to christen this group of amendments. It must have been very frustrating for Members to have to wait through the break to hear the phrase and consider how it will compare with previous soubriquets, including Red Bull, the clause 3 moment and the Gordian knot. It was a difficult choice, looking at the amendments and having listened to the debate, but the cumulative impact of the amendments suggests to me that they should be christened “War and Peace”. I will try to explain that through my remarks. I am not referring to the long process of trying to reform Royal Mail or the post office network, but the cumulative impact of the amendments.
It is right that we have spent some time discussing post offices today. Although there is mention of post offices in one or two other clauses, this is the last clause in the Bill that really focuses on them. It is right for Opposition Members to have talked about the important, unique and valued role that post offices play up and down the country, and I agree with them. Indeed, some were kind about the level of funding that we have put in as a result of the spending review.
I was delighted to attend a meeting of the all-party parliamentary group on post offices last night, at which a number of Committee members were also present. They will have heard the general secretary of the National Federation of SubPostmasters, George Thomson, talk about the federation’s support for the Bill. He issued a news release yesterday saying that sub-postmasters back Government plans for the Post Office. That is a reassuring message for Opposition Members; the national federation that represents sub-postmasters believes that the approach that we are taking in the Bill, and our Post Office policy more generally, commands a great deal of support from sub-postmasters, who are, of course, the experts.
It worried me to see and hear at the APPG, and in the press, the notion that lots of post offices are closing. The national federation has recognised that the Government have said that there will be no closure programme of post offices. In saying that, we have made it clear that if a sub-postmaster retires or dies, we cannot necessarily prevent any individual closure. It is interesting that the figures that were bandied around are not recognised by Post Office Ltd. There seem to be some significant inaccuracies.

Michael Weir: I do not disagree with anything the Minister has said today, but does he not recognise that George Thomson also said in evidence to the Committee that many sub-postmasters are hanging on by their fingernails, and that it was a very different environment out there? Does he not recognise that we are trying to ensure that it does not get any worse for them?

Edward Davey: I absolutely recognise that. That is the situation that we have inherited and are trying to put right. I want to get it on the record that we have seen reports of post offices apparently closing in places such as Tintagel and Padstow in Cornwall, but when one looks at the reality, it appears that those post offices have been replaced, and transferred to post office local branches in Tintagel and St Merryn Padstow. It appears that the data for that allegation are not accurate. People need to reflect carefully how they bandy about figures. Perhaps that is why we need a report, so that we can ensure that we have the correct information.
There were discussions in the debate this morning about 900 post offices for sale, and it was implied that that meant they were going to disappear. It is not unusual for numbers of post offices to be for sale; that is the usual run of things. In fact, the figure given by Post Office Ltd is that on average 200 branches change ownership every quarter, and that has been consistent for a number of years. In the six months to September 2010 there were 302 successful commercial transfers of post offices, as the sub-postmaster sold on to someone else. That is the way those things usually operate. It would be wrong for the Committee, either through briefings received from others or from press reports, to be under any misapprehension. That is why we need a report such as we are proposing.

Nia Griffith: Does the Minister not agree that yesterday it was George Thomson of the National Federation of SubPostmasters who used the figure 900? It was his estimate, presumably based on data gathered from his members. Therefore, it is not a figure that has been plucked out of thin air. Quite clearly, there is a problem in a situation like mine in Felinfoel, where we have been waiting over 18 months to find somebody to take over in an area where there is potential for a viable post office. It is difficult. Does the Minister not agree that the Bill’s provisions will not encourage new entrants, as they will be worried about the lack of a proper IBA?

Edward Davey: I certainly do not agree with that last remark. The national federation has been positive about our proposals. I do not deny that it was George Thomson who used the figure of 900, and I do not dispute the figure. It is right, but it should be put in context. It is not unusual for post offices come on the market; the trend is for 200 to do so every quarter, and in the last six months 302 have been successfully transferred. One needs to put the number in context.

Nia Griffith: I take issue with the way that the Minister has portrayed the statement made by George Thomson yesterday. He said that although he was supportive of the Bill, he was none the less concerned—[ Interruption. ]

Jimmy Hood: Order. The hon. Member’s phone should not be switched on.

Nia Griffith: I am sorry, Mr Hood, but I have been hit by a technological disaster.

Edward Davey: I doubt whether the hon. Lady was deliberately advertising the fact that post offices can provide telephony services, although it is a potential growth area. I think she was going to suggest that I was misrepresenting George Thomson. I would be glad if all Committee members had a copy of the recent news release, which included two caveats—things that the Government needed to do—but which was nevertheless clear in its support for the National Federation of SubPostmasters. I am sure that the hon. Lady has noted how the federation has reacted to Government policy over the years. It does not take such decisions lightly, and we warmly welcome its support for our proposals.

Gordon Banks: Before the Minister moves on from the 200 or 300 post offices for sale, and the 900 mentioned earlier, I remind him that we were not talking about the sale of post offices. We were talking about locations where post offices were not functioning. Many of the 200 or 300 that were sold will still be operating and will therefore not be included in the 900.

Edward Davey: That is always a changing number, although it is publicly available. I was more focused on the numbers given by the press today—not the 900 post offices on the market but a much smaller number of post offices that it claims have been closed since January. We dispute that number. We believe that the press have the figures completely wrong.
I accept what the hon. Lady said about the example from her constituency—that when a post office closes it is often completely outside the control of Post Office Ltd, which may have difficulty in finding a replacement. The post office in Tolworth broadway in my constituency was closed when the sub-postmaster had to leave. I was approached by Post Office Ltd, which said, “She must go into the change programme.” I said, “Absolutely not. There is a real demand for a post office,” and I worked with the Post Office and local people to find a sub-postmaster. It took us a long time, but working with Sue Huggins from Post Office Ltd we eventually found Mrs Patel, and she is now operating that post office successfully.
Clause 11 introduces an annual report on the post office network, which is to be laid before Parliament. We believe that it is important to achieve transparency about the post office network. The statutory requirement in the Bill to lay a report before Parliament goes further than that in the Postal Services Act 2000, which requires information only about the number and location of post offices and their accessibility. We propose a network report that is much more comprehensive. It will include information about other services provided by the post office and about the accessibility of post offices for the various groups named in clause 11(3), which include small businesses, individuals living in rural areas and the elderly.
To make it absolutely clear, the reporting requirement goes significantly further.

Michael Weir: I do not dispute what the Minister is saying; that is welcome, but if Royal Mail is privatised there will be a completely different atmosphere. It is incumbent on Parliament to have as much information as possible about the ongoing status of the post office network.

Edward Davey: In christening the amendments the “War and Peace” amendments, I was wondering which of the five families members of the Committee might belong to, whether it be the Rostovs, the Bolkonskys or the other three, the names of which escape my memory. I am not sure which family the hon. Gentleman belongs to, but I must say that we agree on stronger reporting, which is why the clause is stronger than the Postal Services Act 2000.
The requirements that we propose for the post office network report are exactly the same as the previous requirements that the Opposition introduced and then modified as concessions to the Postal Services Bill in 2009, in response to amendments tabled by Lord Hunt of Wirral and Lord De Mauley who, as Opposition Members will know, are both Conservative peers. Given that a clause on an annual network report was not even added to the original Bill in 2009, it is slightly surprising that the Opposition want to increase the statutory reporting requirements under this Bill.

Gordon Banks: As the hon. Member for Angus said, we are moving into a completely different landscape with a privatised Royal Mail, so the impact on the post office will be significantly different from that proposed under the Bill in 2009.

Edward Davey: I do not know whether the hon. Member for Ochil and South Perthshire has spoken to his colleague, Lord O’Neill of Clackmannan. He was the former Member of Parliament for Ochil, so I am sure that hon. Gentleman knows his Labour colleague in the other place well. When the Conservative peers, Lord Hunt of Wirral and Lord De Mauley, were tabling amendments last year in the other place for a less involved reporting requirement, Lord O’Neill opposed them. He accused the Conservatives of hypocrisy in respect of the post office network, and said that
“there are so many reports about the Post Office…There is no shortage of reporting on it or debate about it. We do not necessarily need yet another report that will gather dust on the shelves on the Library of this House.—[Official Report, House of Lords, 24 March 2009; Vol. 709, c. 561-2]
The hon. Gentleman’s predecessor was against the idea of more reporting requirements last year. But we are going further than that in this Bill. Perhaps we are particularly irritating his predecessor.

Gordon Banks: The Minister fails to recognise that we are moving into a completely different set of circumstances with this Bill from the previous Bill. The report is valuable, but we do not want it to gather dust. We want it to be put to use. We do not want the hon. Gentleman to produce a Bill that will lie on top of a shelf.

Edward Davey: I accept that there are different circumstances. In the previous Parliament, there were two closure programmes in which 5,000 post offices were lost. In this Parliament we have a fully funded policy under which we will not see a repeat of those closure programmes. The hon. Gentleman is right. There is a difference.

Gregg McClymont: We are hearing amazing knockabout, but let us be clear about the difference. We are moving to a situation in which a privatised Royal Mail will be contracting for a position of strength with Post Office Ltd, which it already subsidises. Post Office Limited is entangled at the moment with the Royal Mail Group. It is a subsidiary; it is a sibling, if not a child in that relationship. The notion that we are not in a profoundly different situation from that which we were in under the previous Government with Royal Mail still in public ownership is really taking things to a pretty tricky extent.

Edward Davey: The problem with the last relationship before the Bill will be enacted is that 7,000 post offices were closed during the 13 years of the previous Labour Government. The hon. Gentleman is absolutely right; the circumstances then were different. But those circumstances occurred when Royal Mail and Post Office Ltd were in the same group. The notion that public ownership or the two companies being in the same group somehow protects post offices is incorrect, as demonstrated by the 7,000 post office closures.

Gregg McClymont: Post Office Ltd is currently part of Royal Mail Group. The Minister described it this morning as a subsidiary part of Royal Mail Group. When Post Office Ltd goes up against a privatised Royal Mail in a commercial negotiation—an IBA negotiation—of which we will know nothing, because it is a commercial contract, the notion that that will be an equal negotiation is, frankly, laughable.

Edward Davey: The hon. Gentleman, in his usual inimitable style, talks down Post Office Ltd. I think that the Kuragins were one of the families in “War and Peace” that were particularly pessimistic, and it may well be that the hon. Gentleman has some heritage there.

Michael Weir: I would have thought that Government Members, given the situation where we have a large, privatised Royal Mail dealing with a publicly subsidised, Government-owned—at least in the short term—Post Office, which is receiving a considerable amount of subsidy, would want to know the ongoing state of that network, the value for money that it is providing and where we are going with it.

Edward Davey: And we do. That is why we have put forward clause 11, and why clause 11 is so much better than anything that did not appear in the original Postal Services Bill 2009, because there was no reporting requirement at all, and why it is better than the Postal Services Act 2000. So let us be absolutely clear about what happened before. But I am glad the hon. Member for Angus has intervened, because I want to come to amendment 3, which he tabled and spoke eloquently about. He is concerned about the phrase “the company’s” in clause 11(2)(a). As I understand it, he is concerned that the annual report on the post office network should not be limited to reporting only on post offices owned and operated by the Post Office company.

Michael Weir: The Minister is right to an extent, but the point is that there is a possibility of confusion, because of the structure of Post Office Ltd and the various franchises that operate.

Edward Davey: The hon. Gentleman has shown with his legal background the importance of not being confused and not having confusing legislation. I have considered his point and we share his concern that there should not be confusion in the Bill, but the Bill already contains provisions that ensure that it will not cover simply post offices owned and operated by the Post Office company—Post Office Ltd—but also any post offices that the company is engaged in providing. If I may direct the hon. Gentleman to clause 14(3), which deals with interpretation—definitions elsewhere in part 1, I think he will be satisfied on that point. Clause 14(3) states that
“references to a company’s post offices (or network of post offices) are to those post offices (whether or not owned or operated by the company) that the company is engaged in providing.”
I think that deals with his point entirely.
On amendment 48, I agree with hon. Members that it is right that the annual report on the post office network should give details of the postal services that the Post Office provides. That is why we include that requirement specifically in clause 11(2)(b), which requires the annual report to contain details of
“the postal services…that are provided at those post offices”.
That would include any postal services that the Post Office provides on behalf of a universal service provider, so there is no need for amendment 48.
I believe that many parliamentarians are interested in whether the Post Office is providing any services for other postal operators in the UK. The Opposition spoke a lot on Tuesday about the importance of the Post Office’s income from mails or the postal service. I want to remind everyone that, although we want the Post Office to be an even stronger partner for Royal Mail in the future, and we know that sub-postmasters value the footfall that mail customers generate, the projected decline in letter volumes means that the postal service will not be a growth area for the Post Office, despite the potential opportunities in parcels. So we need to ensure that the definition is much wider than would be the case if we only looked at amendment 48.
I have already told the Committee about plans for the future of the post office network and the development of new revenue streams, as detailed in our policy statement. We should be clear that the majority of the post office network’s income already comes from other sources, in particular financial services, government services and, as the hon. Member for Llanelli demonstrated, telephony services. Any report should not simply focus on services from the universal service provider; it needs to be wider, and that is how we have written the clause.

Gregg McClymont: What is Post Office Ltd’s annual turnover relative to that of Royal Mail? Does the Minister have that information to hand?

Edward Davey: It is significantly smaller, as the hon. Gentleman will know. It may be smaller by a factor of 1:6 or 1:7, but I will give him the exact figures in due course. As I think the hon. Gentleman will admit, size is not everything. [ Laughter. ]

Gregg McClymont: I will admit no such thing.

Edward Davey: I thought the hon. Gentleman might not admit it, but that is why I am speaking against many of the Opposition’s amendments. They want a “War and Peace”-type report, and we do not think that is necessary.
I agree with the aim of amendment 49 that the annual report on the post office network that we propose should
“provide information about the accessibility of the company’s post offices”
to both small and medium businesses. We know that businesses value the post office network. According to research by the Federation of Small Businesses, almost 20% of small businesses visit the post office every day, and nearly half twice a week. That shows how significant the post office network is in the life of our economy. I therefore share the concern that lies behind amendment 49, and I agree with its intention. I am trying to be as helpful as I can to the hon. Member for Ochil and South Perthshire, to show that great minds think alike, but the clause already covers what the Opposition seek.
We should be clear that there is no universal definition of what constitutes a small or medium-sized business. In the United States, the term “small businesses” generally refers to businesses with fewer than 100 employees, while “medium businesses” refers to those with fewer than 500 employees. In the UK, SME statistics define a small business as one with 10 to 49 employees, and a medium business as one with 50 to 250 employees. If we are going to be particularly technical, one could argue that since UK SME statistics define a small business as a business with between 10 and 49 employees, and a micro-business as one with between one and nine employees, both micro-businesses and sole traders could be excluded from the definition in clause 11(3).
However, that is not what we are suggesting. About 95% of SMEs have fewer than 10 employees, and we know that post offices play a particularly valuable role for some in that group—such as eBay sellers—so they should be included in the report. We therefore intend “small businesses” to include all those with fewer than 250 employees, which is in line with the broader UK statistical definition of an SME. Of course, in line with the relevant provision in clause 4, if the Secretary of State was not satisfied that the post office was providing broad enough information to meet that requirement, under powers in clause 11(4) they could direct the post office to provide any additional information that they deemed necessary.

Gordon Banks: I am grateful to the Minister; perhaps he saw the light even before we wrote the amendment. However, it is not clear from the Bill that the Minister’s intentions regarding the figure of 250 employees are covered either by clause 4 or clause 11. Will he go away and come back on Report with something that makes that clearer, perhaps by inserting “small businesses, or businesses of up to 250 employees” in the relevant clause?

Edward Davey: I must tell the hon. Gentleman that I am satisfied with the way that we have defined it; it is what his hon. Friends in the last Government thought would be the right definition. I have tried to take the Committee through some detailed definitions to show that I do not believe there to be a problem with this part of the clause. The hon. Member for Cumbernauld, Kilsyth and Kilkintolloch East—[ Interruption. ]

Gregg McClymont: Kirkintilloch East.

Edward Davey: Kirkintolloch East.

Gregg McClymont: Will the Minister give way?

Edward Davey: I am very happy to give way.

Gregg McClymont: I will not hold that against the Minister; he is not the first and not the last. The hon. Member for East Dunbartonshire was telling me that she has the other half of Kirkintilloch. I can see that without doubt I have the better half.

Edward Davey: I am sure that my hon. Friend the Member for East Dunbartonshire will find some way to use that observation.
A revelation has just come to me, to help the hon. Gentleman who shares an area of Scottish territory with my hon. Friend, that the turnover of Post Office Ltd is approximately 10% of that of Royal Mail Group.
In my opening remarks I have tried to clarify the position regarding amendments 3, 48 and 49 so that hon. Members will feel able to withdraw them or not press them. I now turn to amendments 4, 33, 36, 37 and 38. Those all seek to increase the statutory requirements for the content of the post office network report, and that is at the heart of the “War and Peace” nature of the group.
A commentary on changes in the network is precisely the sort of information that I would expect such a report to contain, and I believe that the current provisions in clause 11 are sufficient to ensure that. Although we are committed to improving transparency in the post office network, the desire must be balanced against the need to limit the bureaucracy imposed on Post Office Ltd and on individual sub-postmasters. Increasing the amount of data that they are asked to collect and compile may distract them from their real task of securing a sustainable post office network for the future.
Amendment 4, tabled by the hon. Member for Angus, seeks a statutory requirement that the report contains information about
“the nature and extent of any business run in parallel with the post office business”.
The majority of post offices—the hon. Gentleman has mentioned the figure of 97%, which I think is correct—are independently owned and operated businesses. Requiring the report to contain details on the nature and extent of any businesses run in parallel with the post office business would impose a significant new regulatory burden on what are primarily small or even micro businesses. Opposition Members seemed to suggest that such information is currently collected but I have to tell them that it is not, and it would be a new burden. One can only imagine how the report would have to be drafted in order to take account of post offices in fish and chip shops, pubs, libraries, small shops, off-licences and garages. We could end up with an extremely unwieldy report that does not add much to the debate, when we should focus on ensuring that post offices are there and accessible to those who need them.

Richard Fuller: Does the Minister agree that we hear this time and time again from those who want to regulate business? They say that the information is needed, even though it is not required. They say that the information is already being collected and it will not present an additional burden, when it is not being collected and it will be an additional burden. They say that it will be easy to collect when it is difficult to collect. At a time when businesses around the country are trying to survive a tough recession, which was caused by the over-spending of the previous Government over the past seven years, the last thing we want is another regulatory burden on small businesses.

Edward Davey: The hon. Gentleman knows that as a Minister in the Department for Business, Innovation and Skills, I work closely with the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk). We are particularly focused on ensuring that we do not increase the regulatory burden.

Gregg McClymont: I am fascinated by the turn that the debate is taking. Some hon. Members have made the mistake of assuming that Post Office Ltd is a private company. Post offices are a social utility. They cannot be measured and calculated in the same way as a private sector organisation whose only objective and duty is to provide shareholder value. I can see that this is what will happen with Royal Mail when it gets into negotiations with POL. Royal Mail will be absolutely a private sector organisation, understandably focused on shareholder value and profit. POL does not have that luxury.

Edward Davey: The hon. Gentleman, not for the first time, is slightly confused between POL and individual sub-postmasters. The problem with the amendment is that it would impose a huge burden on individual sub-postmasters who run private businesses. Yes, of course post offices have a social use. That is why the Government are putting £1.3 billion or £1.4 billion into both subsidy and transforming the network. We are not going to repeat the closure programme, because we recognise their social value. But we also recognise that individual sub-postmasters have invested a huge amount of time and money to build up their businesses, and we want them to make those businesses successful. We want to ensure that the post office network thrives. Tying them up in unnecessary regulations is not the right approach.
It is interesting, because I recall the Committee stage of the 2009 Bill in the other place, when the Labour peer Lord Brooke of Alverthorpe opposed Conservative party amendments. Their amendments were rather more modest in their reporting requirements, because they took account of the regulatory impact. But even so, he said they would be
“a substantial addition of regulation in the area of improving public performance.”—[Official Report, House of Lords, 24 March 2009; Vol. 709, c. 562.]
So I wonder what has happened in the past year—perhaps new Labour has morphed into old Labour.

Gregg McClymont: The Minister is privatising Royal Mail—that is the difference.

Edward Davey: The hon. Gentleman forgets that we are talking about post offices. [ Interruption. ] I think I can anticipate the hon. Gentleman’s argument.

Gregg McClymont: Give me the answer first.

Jimmy Hood: Order. Hon. Members should not bark at the Minister when he is addressing the Committee.

Edward Davey: That is very kind of you, Mr Hood. I will think about how I can use that in the christening of a future group of amendments.

Priti Patel: Perhaps the Minister can help Opposition Members by clarifying the regulatory burdens that would be borne by the sub-postmasters out there. I speak with some experience, because my parents were sub-postmasters. There are not enough hours in the day to complete forms—let alone go to the cash-and-carry if they are running a shop—and also fill in tax returns and all the other paperwork that has to be completed. Have the Opposition worked out how many hours in the day there would be to sit and fill in even more forms?

Edward Davey: I do not speak for the Opposition, but here is someone who does.

Nia Griffith: Given what the Minister has laid out in the document that he has recently shown us—a very glossy document telling us about the potential for the Post Office in the digital age—and that he has specified in that document the joys of post office local, can he tell us how he is going to evaluate the success of such programmes if he is not going to include in the report the businesses that are parallel to the post offices? I cannot understand how he is promoting the idea of diversification and saying, “This is the way forward” in order to make the Post Office a viable concern at the end of three years of the funding programme, and yet he does not seem to have the mechanism for evaluating what has happened.

Jimmy Hood: Order. The Minister has been generous in taking interventions on the amendment, and the Chair has been very generous in allowing time for interventions. I advise and ask Members to make shorter interventions, to stick to the point, and in particular, to speak to the amendment.

Edward Davey: Thank you, Mr Hood. I will move on to the next amendment, but first I will answer the hon. Lady. I will refer back to the document that she mentioned, because it contains information about some of the research that we have already done on Post Office Local. For example, on page 12, it says:
“94%...of customers are extremely or very satisfied with their overall experience;81%...of customers greatly appreciate the longer opening hours, with 23% using the branch on weekday early mornings, 12% on Saturdays and 5% on weekday late evenings”.
I could go on, but I think that you would bring me to book, Mr Hood.

Nia Griffith: How will future evaluation be done? That is what the report and the amendment are about—future evaluation.

Edward Davey: First, we must evaluate the pilots. I am sure that when the pilots have been evaluated, we shall make more information available. These reports will contain what is described and they will build on the reports that we have seen from Postcomm in this area. They will clearly be spelling out much of the information that is set out.

Gordon Banks: Before the Minister moves on to the next amendments, I want to ask him this question. Is he saying that the information for which the hon. Member for Angus is asking in amendment 4 is not held by Post Office regional offices? In my experience, it is.

Edward Davey: I would be interested to hear about the hon. Gentleman’s experience. I did ask him in an intervention whether he had spoken to Post Office Ltd about that and he said that he had not.

Gordon Banks: I am not talking in this case about whether I have spoken to Post Office Ltd about the amendments tabled. I am saying that Post Office Ltd knows what businesses are run in parallel with post offices that they are responsible for delivering. I think that every hon. Member will know that from their Post Office regional office. Is the Minister trying to tell us that the Post Office does not have that information? That is contrary to my understanding.

Edward Davey: My concern is about the way in which the amendment is drawn. Sub-postmasters up and down the country would have to fill in an awful lot of forms to ensure that there was consistency and coherence and that the information was up to date. I am not prepared to allow that. Yes, of course we need to ensure transparency. That is why we are going further than the Labour party proposed to go on transparency—so that we can have accountability in reporting. However, in going further than the Labour party was prepared to go, we will not impose burdens and red tape on sub-postmasters.
If I may, I shall proceed to amendments 33 and 36 to 38. These would increase the statutory requirements for the report, focusing on changes in network provision. Given our commitments to the post office network, hon. Members should have less reason to worry about post office closures than they may have had in previous years. Although we agree that an annual report is very important, an annual report on its own is only an annual report. Other means of monitoring the post office network are already in place and have already been put before Parliament. I am surprised that although we have had a very long debate on the “War and Peace” amendments, we have not heard about those other ways of reporting, which are readily available.
For example, a comprehensive list of all post offices in the country, broken down by parliamentary constituency, is placed in parliamentary Libraries each summer. I am sure that Opposition Members were aware of that. My Department monitors Post Office Ltd’s compliance with the access criteria on a monthly basis. Also, Post Office Ltd publishes details of the monthly changes in the network, currently subject to local consultation, on its website. I have an example for the Committee that sets down all the consultations relating to March 2010. That is monthly reporting and is in much greater detail, because it is about consultations that the public need to know about. That has not been mentioned to show how open and transparent the Post Office already is.
On a quarterly basis, the Post Office sends reports on the number of post offices and their geographical distribution to parliamentary Libraries. Data are also provided on a quarterly basis to Consumer Focus to enable it independently to scrutinise the results.
All the measures ensure that the information that Parliament receives on the post office network is as thorough and up to date as possible. They go way beyond our own clause and certainly the amendments from the Labour party. They use modern technology to ensure that the information is readily accessible 24/7.

Nia Griffith: Will the Minister explain that actually those are collections of figures? What we are asking for, in the amendment tabled by the hon. Member for Angus, which is about parliamentary accountability and having debate on the Floor in the House, is an evaluation. The figures may be there, but we want the opportunity to debate those figures. It is the evaluation that we are looking for. Will the Minister tell us how he expects there to be parliamentary accountability?

Edward Davey: That information is not simply raw data. More descriptive information is available, and not just in the annual report. I am about to come to the amendment regarding parliamentary debate tabled by the hon. Member for Angus.

Graeme Morrice: The Minister mentions Consumer Focus. What are the Government going to do when they abolish it?

Edward Davey: We will be discussing that point in some detail in later clauses. The hon. Gentleman will note, when we get to those clauses, that Consumer Focus is not mentioned, but the National Consumer Council is. That was the predecessor body to the Consumer Council, which the previous Government abolished before they moved related responsibilities to Consumer Focus. We are indeed moving Consumer Focus into Citizens Advice, but we are not in any way abolishing its duties, whether in relation to its wider consumer duties or its duties with respect to things such as the post office network. I have made that point very clear to Consumer Focus, and it was also made clear in the statement by my right hon. Friend the Business Secretary. I am happy to debate that point, and I hope that I have taken the early opportunity to be able to dispel hon. Member’s concerns that somehow we have had to weaken the independent consumer monitoring of the post office network. Nothing could be further from our intentions. I would therefore ask hon. Members not to press amendments 4, 33, 36, 37 and 38.
Amendment 5 seeks a statutory requirement for a parliamentary debate on the annual report on the post office network after it has been laid in Parliament. I am sorry to disappoint the hon. Member for Angus, but I believe that that amendment is also unnecessary. Through the requirement to lay a report, alongside the other measures that I have described, such as the monthly and quarterly reports, I think there is already suitable provision for parliamentary oversight. Furthermore, hon. Members are skilled and experienced enough to secure a debate, should they want one, through the usual channels. I therefore urge the hon. Gentleman not to press his amendment.
There were one or two other points in the debate that I should deal with in case there are particular concerns to hon. Members in their constituencies. The issue of mobile post offices was raised by the hon. Member for Llanelli and other Labour Members. I am not quite sure whether they are concerned about certain definitions in clause 11. If they are concerned that somehow mobile post offices will not be covered by the report, it is certainly my understanding that they will be. I would like to reassure hon. Members that information about the number, location and services offered by mobile post offices is precisely the sort of information that should be covered in Post Office Ltd’s annual report. It is not our intention for there to be any ambiguity.

Gordon Banks: That is good. I thank the Minister for that because that was a point I made in my sort-of clause stand part contribution. Amendment 37 asks for the number and locations, so we can have a handle on where the locations are and how many services are being provided by mobile units.

Edward Davey: It is certainly our intention for the report to be rich in this area, because we see a role for outreach and mobile post offices. The previous Government introduced a number of models, and this is one of the better areas of their policy on post office networks that we have inherited. Perhaps the hon. Gentleman remembers that 500 outreach branches were introduced as the previous Government tried to mitigate the loss of the 2,500 branches that they were closing in the previous programme.

Gordon Banks: When the Minister suggests that the reports are going to be rich in data on usage of mobile post offices, is he telling me that they will comply with amendment 37?

Edward Davey: I am telling the hon. Gentleman that the report will comply with clause 11, which incorporates all that is required to give a full and comprehensive account of the state of the post office network.
I shall conclude my remarks, otherwise someone may want to christen me Tolstoy, and it is important that we make progress.

Michael Weir: We have had a long and interesting debate. I understand that Government Members are concerned about regulation. I ran a small business and I have had experience of Her Majesty’s Revenue and Customs, and the Scottish Legal Aid Board, so I know a bit about form-filling and what you have to do to keep a business going.
The amendments are not intended to impose regulation on small businesses; they are intended to provide Parliament with a regular update on the state of our post office network. We must remember that the Government, the Scottish Parliament, the Welsh Assembly and others are—quite rightly—putting a huge amount of public money into the network to help it to diversify and change. We need to see how that network changes over the years and how it links in with other parts of business and with the social needs of our community.
The Minister has said that much of the information is not available. I recall that when the previous Government were closing post offices, Post Office Ltd provided me with huge amounts of information about every post office in my constituency—in fact I could hardly lift the box that it gave me. That information covered everything from the post office to the buses that passed it, who used it, how many people used it, and what other sort of business took place there. That information already existed then.

Edward Davey: The hon. Gentleman is right that such information was collected during the previous Government’s closure programme and he is right that it was massive and voluminous—it reminded me of “War and Peace”. Our point is that we do not want to have to recreate “War and Peace” every year.

Michael Weir: My point is that the information already exists on the vast majority of post offices, and it is held by Post Office Ltd, so the proposal does not put a burden on post offices.
The Minister talked much about how the Bill is better than the 2009 Bill, which was withdrawn—I did not support that Bill, either, and I do not see that it is particularly relevant to my point. I consider the amendment necessary.
I understand the Minister’s point on amendment 3. However, in the definition that is provided in clause 14(3), the phrase
“that the company is engaged in providing”
opens up another wonderful field of debate for lawyers. I am not satisfied that it necessarily meets the point that I made.
I seek your guidance, Mr Hood, but I would like to press amendments 3 and 4 to a vote, but not amendment 5, because I recognise that there may be other ways in which to secure the debate that it proposes. One of my reasons for tabling amendment 5, however, is my concern about some of the things that are happening.
For example, in this House we have always had a regular annual debate on fisheries, which is very important in my part of the world. I notice that that debate has disappeared from the Government’s agenda and is now taking place only in Westminster Hall as part of the Backbench Business Committee agenda. Such a situation is indicative that if these matters are not dealt with, debates on important subjects such as the Post Office will not be aired in the Chamber.
It is important for Post Office Ltd for parliamentarians to know how our post office network develops once Royal Mail is—unfortunately, if it is—privatised, and to know about the huge imbalance between those two companies. I should, therefore, like to press those amendments to a vote.

Gordon Banks: Since the Minister is extending his creative skills, giving our amendments interesting titles, he is probably writing his CV for a move to the creative industries brief. We wait with bated breath to hear what he thinks about our next batch of amendments.

Edward Davey: I happily reassure the hon. Gentleman that the current Minister with responsibility for the creative industries is too good and is irreplaceable.

Gordon Banks: I couldn’t possibly comment. Perhaps the Minister is being too creative.
I want to take the Minister through some of his comments. I acknowledge that the Government’s position is that there will be no closures programme, but we know that there will be post office closures. The quarterly report for Post Office Ltd, which the Minister mentioned, shows that there will be closures. The comments that we have heard about Bankfoot being one of those 900 reiterated the point that places that should have post office services do not have them.
My hon. Friends and I agree that, with the transition and what will happen to Royal Mail, the Minister does not want to understand the importance that we attribute to the privatised Royal Mail in relation to the clause and the amendments as they relate to the Post Office. That is his prerogative, but the need for the report is even more important, because the thrust of the Bill is to privatise Royal Mail. We agree that the report is needed, and we want to make it better. Our amendments 33 and 36 to 83 do that. We want to see the amendments incorporated into the Bill so that we can better evaluate the money that the Government are investing into the post offices; the amendments will allow us to do that.
I accept that subsection (2)(b) may be designed to match the impact of amendment 48. I take the Minister at his word on that. However, we felt that that subject was so important that we wanted it singled out. Although I shall not press that amendment to a Division at this point, we may want to return to it later.
On amendment 49, and how there is not an overwhelming definition for small businesses, the Minister talked about the definition of small businesses in the United States, but the definition in the Bill does not deal with those. I said in my opening remarks on the amendments that I am happy to accept whatever definition the Minister wanted to put on small and medium-sized businesses. I hear the Minister when he says that he means “small businesses” to encapsulate those with up to 250 employees, which, by one of the definitions of his Department would include small and medium-sized businesses—I am grateful for that—but I am disappointed that he did not see fit to make a slight amendment to the relevant clause by adding “small businesses up to 250 employees” into subsection (3)(c). That would have made it simple. Had that been included in the Bill, we would not be having this discussion. The Bill is lacking clarity in that regard. I hope that the Minister’s words come true.
I will return to our intentions in respect of the amendments in a moment or two. Let me first deal with the heart of what the Minister called the “War and Peace” amendments. We have a structural disagreement here. We Opposition Committee members have given examples showing that the level of information that we want to be included in the report actually exists. We can all quote verbatim examples of such information being provided to us by Post Office Ltd. Indeed, I did so in my earlier contributions in relation to Coalsnaughton andTillicoultry. All of us could probably highlight examples.
No burden would be placed on either Post Office Ltd or sub-postmasters by asking for such information to be included in the report. The information is in Post Office Ltd’s regional offices, and it just needs pulling together into a format that would allow us to get a better handle on how Post Office Ltd copes with changes in future.
On the points that the Minister has made about reports, to which I have made reference, already being available to Parliament, nobody is disputing what is currently available. In conjunction with the need for an annual report, we feel that the Minister believes that what is currently available is not enough. We agree that it is not enough, but our amendments would make the Bill, as drafted, better in that context. In his response to the amendments, the Minister did not convince me or my hon. Friends, and he certainly did not convince the hon. Member for Angus, that an additional burden would be created, which was what the main part of his response focused on.
The Minister has asked us not to press amendments 33, 36, 37 and 38 to a vote, and if he had convinced us, we might have decided not to do so. Those amendments have added value. When questioning the Minister on mobile service delivery, he would not even admit that the report actually met the aspiration of amendment 37, so he certainly has not convinced us on that.
I want to put amendments 33, 36, 37 and 38 to a vote and not to press amendments 48 and 49, to which we may return at a later stage.

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Amendment proposed: 4, in clause11,page6,line22,at end add—

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Amendment proposed: 33, in clause11,page6,line26,at end insert ‘and

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Amendment proposed: 36, in clause11,page6,line26,at end insert ‘and

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Amendment proposed: 37, in clause11,page6,line26,at end insert ‘and

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Amendment proposed: 38, in clause11,page6,line26,at end insert ‘and

Question put, That the amendment be made.

The Committee divided: Ayes 8, Noes 10.

Question accordingly negatived.

Clause 11 ordered to stand part of the Bill.

Clauses 12 to 15 ordered to stand part of the Bill.

Clause 16

Gordon Banks: I beg to move amendment 44, in clause16,page9,line25,at end insert
‘(but may not convert benefits that are not money purchase benefits to money purchase benefits),’.
I will try not to detain the Committee too long, but we are getting to a technical part of the Bill, so it is important that we get this part right—it is important that we get every part right. However, I fear there will be a number of technical discussions as we move through.
Clause 16 allows the Secretary of State to create a new public scheme and transfer qualifying accrued rights into it. Qualifying accrued rights are the liabilities for which the Government intend to take responsibility, so, broadly speaking, they are all the rights that members of the Royal Mail pension plan have accrued before an unspecified date. Liabilities accruing after that date will remain with the new RMPP. We welcome the transfer of liabilities to the new scheme. That is what taking responsibility for the deficit amounts to.
Clause 16(4) allows the Secretary of State to make the benefits for active members different from the benefits for true deferreds. True deferreds are members who opted out of the RMPP or left the Royal Mail before the division that I referred to a few moments ago. The explanatory notes say that the purpose of subsection (4) is to allow the Secretary of State to provide active members with “better” benefits. In fact, the power allows the Secretary of State to convert final salary benefits to money purchase benefits, which, as we all know, are less secure.
The Minister, on behalf of the Secretary of State, will say that clause 19 prevents such a move, because it states that a transfer cannot be made that would diminish accrued rights; the rights must be “at least as good” after the transfer. However, one could argue that converting final salary benefits to a cash equivalent means that the value is “as good” as the defined benefits that the cash equivalent replaces. Transfer values work by converting defined benefits into a cash equivalent transfer value, while the cash lump sum is transferred into another scheme. In monetary terms the value is the same, but the security of a defined benefit is lost. This should not be controversial, and if the Minister accepts the amendment, it would show his commitment to the position that I have outlined. Alternatively, perhaps he can give an assurance, on the record, about his intentions and reassure us that our fears in relation to the amendment are unfounded.

Edward Davey: If I can beg the indulgence of the Committee, as we have moved on to part 2, I have some preliminary remarks to introduce not only the amendment, but the part before us. As the hon. Gentleman has suggested, the part is relatively technical, which is why I decided to try to help by writing to members of the Committee with some background, in addition to the notes on clauses. I hope hon. Members have received my letter of 11 November, which set out the background as to why this part is important, as well as further details.
As we discussed on Second Reading, the deficit in the Royal Mail pension plan is huge and volatile; as at 31 March 2010, the deficit was £8.4 billion and the total liabilities of the plan amounted to £34.4 billion. It is a pension burden that is completely out of proportion to the size of Royal Mail as a company, and the previous Government, who are now in opposition, agreed that something had to be done. The proposals in part 2 enable us to make such provisions. We will take on the responsibility for the deficit and reduce the size of the overall plan to a more manageable level. We will do that and at the same time protect the interests of the beneficiaries, which is a clear principle that we share with the previous Government.
The proposals will safeguard the pensions benefits accrued by members; member protection is paramount and it therefore features prominently in the Bill. We are committed to working closely with the trustees to deliver a seamless experience for members of the pension trust. Given the size of the deficit in the plan, I have no doubt that the provisions in part 2 will come as a great comfort to the 437,000 members of the plan and their dependants. I should point out, at the beginning of our discussions on the pension plan, that our proposals will be subject to state aid clearance, which is why some of the detail has to be provided in secondary legislation. However, we have made our policy position clear on all the key points, and I look forward to going through those in more detail with the Committee.
Amendment 44, introduced by the hon. Member for Ochil and South Perthshire, would mean that the new public scheme could not contain a provision that would convert defined benefits—pensions based on salaries and service—into money purchase benefits, or pensions based on the value of a member’s pot at retirement. I appreciate the sentiment behind that. A key difference between defined benefits and money purchase benefits is the level of risk held by the member. Money purchase benefits depend on investment returns, whereas defined benefits do not.
We recognise that it would not be right to increase the amount of risk members hold when benefits transfer to the new scheme, and I assure hon. Members that the Government will not convert benefits in such a way. Rather, we are committed to ensuring that benefits are fully protected when they transfer into the new public scheme—fully protected in terms of not only their value, but their form—and that commitment is made squarely in the Bill.
In transferring rights into the new public scheme, the protection in clause 19(2) would apply, and the hon. Gentleman has anticipated that response. That protection means a member’s “relevant pensions provision” must be at least as good in all material respects after the transfer as it was before. That obligation on the Secretary of State would prevent the conversion of a defined benefit into a money purchase benefit. The protection in clause 19(6)—to ensure that rights in the new scheme are protected—would be engaged in relation to any subsequent amendment of the new public scheme. That means that member consent would be required for any conversion of a defined benefit into a money purchase benefit, which provides members with the same protection as they would have received under the Royal Mail pension plan. I repeat that we have absolutely no intention of proposing any such conversion, so there is absolute clarity on that point.
Furthermore, in practice, money purchase benefits could not be offered by the new public scheme. Money purchase benefits depend on assets being invested, with any investment returns contributing towards a member’s pension on retirement. The new public scheme, in common with all major Government schemes, will be a “pay as you go” scheme. That means that it will have no access to funds, hence money purchase benefits could not be provided.
I hope that my assurances about the Government’s intentions and the solidity of the protection, including that provided by the Bill, are sufficient for the hon. Gentleman to withdraw his amendment. This has been a useful short debate, because it has enabled me to go on record and reassure him, and those reading the transcript of this debate, about our exact intentions. I hope, therefore, that he feels able to withdraw his amendment.

Gordon Banks: I am grateful to have heard the Minister’s words, as, I am sure, are many thousands of people. I believe that the amendment is important, because it has allowed him to speak on the record and to provide a degree of clarity that is not necessarily apparent from the Bill. Such clarity is fundamental, and I thank him for clarifying that “as good” means not just “as good in cash,” but “as good in terms.”
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nia Griffith: I beg to move amendment 39, in clause16,page9,line43,at end add—
We have come to an important part of the Bill—a part on which we have been in agreement throughout our evidence sessions and discussions to date. There is a clear understanding that, for Royal Mail to be successful, the pension deficit must be addressed. Here, we are looking at how that will affect individual pension holders, because we do not want anything in any way to be detrimental to their outlook for the future. Many people have worked their whole life for their pension, and they will be reliant upon it in their old age.
It is significant that the chairman of the pension plan’s trustees, Jane Newell, spoke so warmly about the scheme. She pointed out some of the reasons for the deficit, one of which is that we are all living longer. She put a figure on that:
“One year on life expectancy equals 3% to 4% on the liabilities. That is about £1 billion.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 102, Q205.]
Living longer clearly has a tremendous effect on the deficit of the pension fund, as do the other two factors that she mentioned, which are the falling bond yields and the timing of the previous formal valuation, when there were very specific investment conditions.
I now want to focus on the situation facing the thousands of pensioners, as well as those who have deferred their pensions, perhaps because they have taken different employment, and the sorts of information that might be made available to them. Although we are eating, sleeping, breathing and thinking the Bill, many people, although they might hear the occasional news snippet concerning Royal Mail, may not connect that with their personal circumstances.
The Bill proposes the removal of the bulk of the Royal Mail pension plan deficit by transferring the liabilities and assets into a new statutory scheme, which is to be run on a “pay as you go” basis backed by the UK’s taxpayers. We have analysed that, so we can see that it provides a lot of security, but members of the public are worrying about how the change will affect them, their partners, their families and their homes, and are asking, “What will happen? Will I be okay? Will everything be okay with this scheme?” We do not want to see any unnecessary worry or upset. We all know the anxiety that change can bring. I am sure that every member of the Committee knows about the administrative nightmare caused by switching from one energy company to another. It can result in endless streams of bills being sent through the door requesting further payments of the same bill. We all have examples of people who feel that administrative systems do not always recognise them as individuals, so they have to phone time and again to try to put things right.
That is particularly true where many people share the same name, as we do in Wales. David Davies at No. 1 worries that he is going to be mixed up with David Davies at No. 3, and David Davies at No. 34 worries that he is going to be mistaken for his son, who lives at the same address. Some may think that this is a joking matter, but I joke not. Not long ago, a gathering of police officers thought that they had invited the right hon. Member for Haltemprice and Howden (Mr Davis) to be their guest speaker, only to be taken aback when the hon. Member for Monmouth (David T. C. Davies) turned up. They were even more taken aback by the comments he made, and he had to be bundled out of the back door. It is just as well that a third hon. Member with the same name was soundly defeated at the recent election. It is not a trivial matter. We are talking about people’s pension rights and the income that they need to keep them in their old age.
We are trawling the media and trying to discover the Government’s plans for the future of the Royal Mail, but that does not mean that everybody knows exactly what is going to happen. Although information is sent to people, they often put bits of paper to one side and do not realise that things have changed until something goes wrong at the last minute and they do not get what they expect through the post. A significant number of pensioners will be alarmed by the changes and will worry about the security of their pension rights. As it is the Government who are introducing the changes, it is the Government who should take responsibility to ensure that all members of the pension scheme are fully informed of what the changes will mean to them. That is precisely what we are asking for in the amendment. They need a well prepared communication programme.

Gordon Banks: I am sure that we have all been visited by constituents who are distressed either because the information with which they have been provided is incomplete, or because they have been provided with no information at all. There is a danger that, if they do not receive the right information at the right time, that will have a significant financial impact on them in the future. That is what the amendment is designed to prevent.

Nia Griffith: Indeed. As my hon. Friend says, we have all had someone visit our surgeries with a piece of paper with figures and facts that are a complete mystery, because we never know what is being chopped off or how things are being laid out. Even a different heading can frighten people. We know what it can be like when things are taken over.
The Bill is silent on the important question of how we are going ensure that everyone will be informed. Even though there has been some press coverage, many Royal Mail pension plan members will still be ignorant of the effect of the changes on them personally, because obviously what is done as one large measure nationally is not the same as what happens to an individual. It would not surprise me at all if the Government argue that there is no need for an explicit duty to inform members of the pension scheme. I always think that is one of those things that officials have to put in every rebuttal of every amendment—that there is no need for it. It always seems to be one of the first things that the Minister says in his responses. He will tell us that there is no need to spell it out in the Bill because he will give us lots of assurances. He will expect us to take everything on trust.
The Minister will probably also argue that everything will be fine because the information will be provided by the trustees of the existing pension scheme, but I want to raise one issue with him. The trustees’ responsibility lasts until the point of the transfer, but many pensioners will realise that their pension is changing only after the transfer has happened. Imagine the scenario: a circular from the trustees arrives some considerable time in advance, explaining the transfer, but of course it gets put in a safe place, because pensioners—rather unlike me—file everything away very neatly and always know where to find it. They put it to one side and forget about it, but what happens at the changeover? At present, it is unclear to whom a confused pensioner should turn after the transfer, as the responsibility of the current trustees will end. There is no explicit duty to ensure that pensioners will have someone to turn to if they have questions about the management of the new scheme. Frankly, that is scandalous.
All of us remember those first few months after coming back following the election, when some of us got a little out of pocket because we had to wait weeks and weeks to be reimbursed for our weekly train or plane tickets and our office outgoings. Obviously, we are working people, we have an income coming in and we can manage somehow, but for pensioners, if difficulties arise and their pension payments are late, it could cause them considerable hardship. If they have a number of direct debits going out of their account and the money does not go in, clearly they go overdrawn, which incurs charges, and that can lead to a lot of distress, in particular for older people, who do not like the idea of being in debt or of getting into trouble with their bank.
For such reasons and for all sorts of queries that the pensioners might have about the future of the scheme, they need to know who to contact, who is in control and who is looking after their pension rights—not just who is dealing with the day-to-day, month-to-month issues, but who is ensuring they get what is due to them in the long term. If things go wrong, they do not want to be left listening endlessly to some telephone recorded message, telling them, “Your call is important to us”—so important that they will be kept waiting 45 minutes.
The Royal Mail scheme is currently administered from the Royal Mail pensions centre in Chesterfield. Pensioners have been used to dealing with the centre for many years. The result, of course, is that the centre has experienced staff who are used to dealing with all sorts of queries about the scheme. We all know that moving things around, setting up new schemes and switching to different staff can all lead to confusion, inefficiency and frustration—we need only look at the comments made about IPSA.

Edward Davey: I would like to give an assurance to the Committee and to hon. Members, because I can see that they are already full of consternation at the mention of IPSA, that what we propose will not in any way mirror IPSA. It will be rather more efficient and more effective, and the beneficiaries will not have the problems that Members have had with IPSA.

Nia Griffith: I am delighted with the reassurance, but one’s ambition should not merely be to be a little better than IPSA. I hope very much that it will be very considerably better.
In order to minimise the disruption to pensioners it would make sense if the Government could consider choosing to administer the payments of the new scheme from the centre in Chesterfield. In that way, the staff being used would be experienced and familiar with the system; they would know the difference between David Davies No. 1 and David Davies No. 3 and would be used to their customer base. That would make for smooth running of the new system and would provide much needed reassurance for pensioners. What consideration has the Minister given to where the pension scheme might be administered from? Could it be administered from Chesterfield?
The issue of pensions also raises the question of the future governance of the scheme. The current role of the trustees will end at the point of transfer and the Government have not made it clear who will represent the interest of pensioners under a new public sector scheme. We heard from Jane Newell, the chairman, that there is currently a pensioner-elected representative. Clearly we would like to have some indication from the Minister about what will happen in terms of pensioner representation, because that is the sort of person who can explain precisely why information is needed. They feed back the feelings of the pensioners and those with deferred pensions. They convey what it feels like not to have all the information and to need more. It is important that we know something about what representation there will be. The scheme is a long-established one, so the number of pensioners is likely to significantly outweigh the number of current employees. It is therefore important that information is provided and that there is a pensioner voice on the new body.
What measures does the Minister intend to take to meet the requirements in our amendment? How will he inform the members who are affected that they are to be transferred to a new scheme? How will he ensure that those members know exactly what is going to happen to their accrued rights and understand how the payments systems will work and how the administration of the new scheme is likely to work? Those questions are extremely important to our pensioners. Will he also look at the existing staffing of the Royal Mail pension plan administration to see whether it could be used to make the transfer a lot smoother? Can he tell us how he will give the pensioners themselves a voice on the new scheme? On that note, I conclude my remarks on this extremely important amendment.

Tom Blenkinsop: I should like to speak in support of amendment 39. The Bill proposes the removal of the bulk of the Royal Mail pension plan’s deficit by transferring the liabilities and assets to the new statutory scheme run on a “pay as you go” basis and backed by the UK taxpayers. That represents a significant increase in security for Royal Mail members but it is a change that might cause some unnecessary upset and worry, particularly for older pensioners.
We have received a communiqué from the CWU which goes into those points. It acknowledges the Government’s good intentions in the Bill but states:
“By taking on the pension the government will gain the assets of the scheme, which currently stand at £26bn. While it will become responsible for the liabilities, this is a long-term commitment. In the short-term it is a major gain for the Exchequer.”
A pensioner such as my Dad—an 87-year-old second world war Royal Navy veteran—who is informed that their pension scheme is changing, is going to be perturbed. It is only natural—it is just one of those situations in life. Those pensioners do not have a full grasp or awareness of what is happening. We heard earlier that despite coverage in the media of the Government’s plans for the future of the Royal Mail and the efforts of the National Federation of Pensioners to explain the changes, most members of the scheme will not realise what is happening to their pension until the transfer happens. In my father’s case, the assumption was that one paid into a pension scheme and a team of people would look after it; one could check it now and again until the day one needed to access it. The amendment is about a reassuring communication process, which could provide a user’s guide, a simplified system that would make it more digestible for pensioners.
Communication is essential, as seen in point 95 of the CWU’s communiqué:
“Full consultation on changes to the pension scheme must take place with the union, not only with the pension scheme trustees. While the trustees have legal responsibilities for the scheme the union represents members’ interests.”
Trade unions have retired members branches, which will be needed to discuss such matters. The amendment suggests that they would be able to hold that dialogue and keep members informed of potential changes. Good intentions apart, a communication process that is pre-emptive and not reactive is necessary. In the interim, pensioners who are members of the scheme probably need to know whom to contact now—in the space between the scheme transfer and also in the new scheme. Advice in a digestible, user-guide format would be useful and helpful to pensioners.
For an individual member of the scheme perturbed by what is going on, delay can lead to unnecessary litigation, whether warranted or not, whether followed through or not. As I have seen with other pension schemes, a pensioner might decide to see a high street solicitor, to find out what is going on. That causes that pensioner costs and may cause the Government expense in trying to calm down the individual.
The Royal Mail scheme is currently administered from the Royal Mail pensions centre in Chesterfield, and pensioners have been used to dealing with that centre for many years. We know from other schemes that things can be moved around, and that the setting up of new schemes and switching to different staff and contracts can lead to confusion for pension-holders and members of the scheme. It can also lead to further inefficiency and frustration. The smooth running of the scheme, in the interests of pensioners and the scheme, also needs to be dealt with when communicating with those pensioners.
As the scheme is long-established, pensioners will significantly outnumber current employees. The employee-to-pensioner ratio can distort matters, so it is important that current pensioners are properly represented in the system that is designed to govern the new public sector scheme. The question is: if those pensioners are to be represented, how are they to be represented? The amendment looks back to the Government as an organisation, through the National Federation of Occupational Pensioners—a long-established body with good penetration among Royal Mail pensioners—to play a significant role in representing the interests of members of the new scheme.

Edward Davey: Hon. Members will be pleased to know that I do not have a soubriquet to offer for this amendment. It is relatively straightforward and has been tabled with a sense of consensus. I hope, therefore, that I can help to clarify some of the points in the spirit in which they were made by hon. Members. It is quite right that we should be probed on these critical matters. I may have said this in previous debates, and I am sure that hon. Members have had the same experience that I have had when talking to Royal Mail employees over the years: the pension deficit is the thing that worries them most. As the hon. Member for Middlesbrough South and East Cleveland said, we need to avoid upset and worry for pensioners, and I think this package will do that. They have been worried for many years about the deficit, and sorting it out is very important, so I am grateful for the supportive remarks from Opposition Members.
Amendment 39 would mean that before the transfer of qualifying accrued rights to the new public scheme, the Secretary of State would have to take certain steps to inform members of the Royal Mail pension plan about the pension rights that are being transferred, and other matters. We entirely agree that good, clear and comprehensive communication with members is of the utmost importance. As the hon. Gentleman said, we want to ensure that people, particularly those who have retired, get clear information, in case they are upset in any way. We are, therefore, completely committed to the notion that members should be made fully aware of any changes made to their pension arrangements. I intend to deal with that in some detail, because it is very important to put on the record what arrangements we are putting in place.
First, I just want to offer some other words of reassurance in the same spirit. I would like to make it clear that Royal Mail pension plan pensioners currently receiving pension payments will not see any reduction in their pension; I want to be absolutely clear that that message has got across and any fears or worries are dispelled. Thanks to the protection provided by clause 19, which we will, no doubt, come on to in due course, their pension entitlements will be the same, but will be paid from a different source—the new public scheme.
Secondly, the accrued rights of members who left the service before retirement will be the same as when they left service, and they will receive the same amount of revaluation—that is, increases to account for inflation—before payment. As with the pensioners, at retirement their pension will be paid from a different source: the new public scheme.
Thirdly, for active members still employed by Royal Mail, there will be no reduction in the rights that they have already built up. For those members, the rights accrued up to the cut-off date will become payable from the new public scheme as though the member had left service on the cut-off date. The remainder, including any increases attributable to real wage growth, will be paid by the Royal Mail pension plan. In other words, the total amount of pension payable to a member for service built up prior to the cut-off date will be the same, but it will simply be funded from two different sources. I think hon. Members will have got the gist of that from the letter and from what they heard from the chair of the trustee fund, Jane Newell, but I wanted to get that on the record.
We are keen to ensure that members of the pension fund are kept up to date before, during and after the transition of benefits to the new public scheme. We are also keen to ensure that members receive appropriate assurance that their pensions are safe, and continue to receive correct and timely payments as and when they fall due. We share those aims with not only the hon. Members for Llanelli and for Ochil and South Perthshire, but—as importantly, or even more importantly––the trustees of the scheme.
We are working closely with the trustees to ensure that members receive the right information at the right time, tailored to their particular circumstances. The trustees already provide regular information on our proposals to members. Indeed, only this week a pension newsletter was issued, which provided an update on the proposals in the Bill. I have a printed-off copy of that newsletter, “Pension News”, provided by the Royal Mail pension plan, and I am happy to show that to hon. Members. That is going out to all the beneficiaries. On page 3, there is an update on the Postal Services Bill, with credits to the Government, but we did not decide on its contents or on how it should be laid out; that is a matter for the trustees. The newsletter is going out now, to bring the beneficiaries up to date, or almost up to date, so that it is as though they were reading Hansard or following our proceedings on the internet, as I am sure some people are. We are working closely with the trustees and we are delighted that they have taken that approach with the pension newsletter.
In the evidence sessions, we heard from the chairman of the trustees, Jane Newell, who emphasised the importance of the partnership, saying that the trustees were working with the Government to provide “a seamless member experience.” She said:
“It could be very confusing for our members if they get a benefit statement from some people and another one from somewhere else.”––[Official Report, Postal Services Public Bill Committee, 11 November 2010; c. 105, Q211.]
The amendment would risk creating such confusion, which is one of the reasons why we do not want it. As an occupational pension scheme, the Royal Mail pension plan is already under statutory obligation to provide certain information to members. For example, it must provide information to deferred members on their accrued rights when they leave service. The amendment would result in some members receiving that information twice, from two different bodies simultaneously. That would be inefficient at best, and potentially unsettling for members. Once the new scheme is up and running we intend, at the very least, to ensure that members continue to receive the information that the Royal Mail pension plan currently provides, and we will give due regard to specifying relevant reporting requirements in secondary legislation.
In short, we are fully committed to ensuring that members receive all the information that is specified in the amendment, but we need to work together with the trustees and the members’ representatives to understand the best way to provide that information. A number of pertinent questions have been asked about how we intend to do that. For example, the hon. Member for Llanelli has asked about the role that we expect the Royal Mail pension plan administrators who are currently based in Chesterfield to play. Because we want to continue the high standard of service and support to which members of the pension plan are accustomed, we want to work with the trustees on ensuring that administration is in place. No final decision has been made on how the new governance scheme will be administered, but it is likely that the Government will look—at least initially—to contract the administration of the new scheme to the existing Royal Mail pension plan administrators in Chesterfield. We are speaking with the trustees about that. I hope that reassures the hon. Lady.
A number of questions have been raised about how the voice of the pensioners and the potential beneficiaries will be heard, and I will deal with them in some detail. We should bear in mind that of the 11 members of the trustee board, five are member-nominated, and three of those five are nominated by the CWU, so the current trustee board has strong representation in the discussions. As I have said, Government and officials have been meeting the CWU to discuss part 2 of the Bill, and we have tried to answer all their questions as they have arisen. That is the current state of play, and members have a lot of involvement in governance, but of course in the new public scheme there is a different set of arrangements, so the question of how we would try to continue that involvement under the new approach was pertinent.
We understand the importance of pension scheme members having input into running their scheme; that is absolutely common ground between us. We will therefore consider establishing a governance group with member representation for the new public sector pension scheme for current beneficiaries. When considering this, we will take account of the views of stakeholders and practices in other large public sector pension schemes. For example, the NHS pension scheme and the principal civil service pension scheme have governance groups that meet regularly and include employer and member representatives. The remit of those groups includes such matters as monitoring service delivery and member communication. They would be the sorts of models that we would be looking to. Part of the role of this governance group will be ensuring seamless service within the Royal Mail pension plan. It is absolutely critical that the public sector pension scheme works with the Royal Mail pension plan, in terms of administration, governance and communication. We are absolutely committed to that.

Nia Griffith: Will the Minister reiterate, before he sits down, what will happen at the point of transfer? Will that information role be carried forward, so that the current trustees carry on doing that excellent work? They have obviously started with that leaflet. Will they be working with the Government to ensure the seamlessness of that transfer, so there is not a sudden hiatus and lack of information?

Edward Davey: There will be no hiatus or lack of information. I am slightly worried that there may be almost too much information. One has to ensure that it is digestible and available. The hon. Lady is saying that the transition period can be complex, and we are extremely aware of that. We want to ensure that the trustees and the board—which has member representation and union-nominated members on it—work in tandem with the governance body that we propose to set up for the new public sector scheme. We want to ensure that how members are communicated with is seamless, too. We do not want a plethora of organisations inundating a member with many different bits of communication. We want to ensure that there is a single funnel to the member—a single relationship. The Royal Mail pension plan trustees have been the guardians of that over the years. As I showed with the newsletter, they have played a professional and strong role in that regard. Members, the Government and the company have huge trust in the way that the trustees have gone about their work. Indeed, they have been exemplary. I am sure, therefore, that they will take a lead on this. They and the future governance body will want to avoid anything other than that.
I hope that I have reassured hon. Members, and I am grateful for the chance to have this debate. I hope that the hon. Lady will withdraw the amendment on the basis of my reassurances.

Nia Griffith: I thank the Minister for his helpful explanation; it has provided a lot of additional information. Sometimes, the technicalities of a Bill can be blinding, and one wonders what will happen in practice. He has given us a lot of reassurance on the concern that we raised about getting this right for all our pensioners and ensuring that no one involved will be disadvantaged, upset, or left wondering where the next pension instalment is coming from.
I particularly want to thank the Minister for his remarks about that critical period of transfer, because that is the moment when people will be most worried. I also thank him for the consideration that he has given to the establishment in Chesterfield and to the issue of the real need, in any such transfer, to use the expertise of those who handled the system in the past and who are very familiar with it. I hope that the process will go smoothly, and that people will be able to say afterwards, “Yes, it did go well.” On that basis, with the Minister’s reassurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Gordon Banks: I will not detain the Committee too long, but I just want to pick up on the Minister’s intentions, which he has displayed over the previous two amendments. I want clarification that he will continue to take representations on the important issues in the clause and to ensure that such representations are fully evaluated. If any are taken during the Committee stage, could he share those that are relevant to the clause, and any solutions, with the Committee? If any could be solved with secondary legislation, could he also share that with us when it is appropriate?
The one thing that we must ensure is that the period for getting this part of the Bill right does not stop with the Bill’s scrutiny in this place or in the other place. To get it right, it is necessary that the contents of the Bill, as my hon. Friend the Member for Llanelli has alluded to, can evolve into a system that appropriately serves the needs of the beneficiaries in the long term.
I would be grateful for the Minister’s assurances that he will continue to engage outwith this place on such issues and that, during the Committee stage, he will report back to us on anything that he feels is appropriate and on how he intends to handle them.

Edward Davey: I certainly want to keep the Committee informed of any major decisions that will come from representations and discussions not only with the trustees, but with the CWU and with other Members who want to discuss such critical matters. We have set off in that spirit, both in terms of being clear on the deciding of the cut-off date, which is a critical point for the establishment of the new public sector scheme, and in terms of writing to Committee members to give detailed background to that scheme. I hope, therefore, that hon. Members will accept our assurances that we will try to keep the Committee updated if there are any major decisions to add to what has already been disclosed.

Gordon Banks: As well as sharing any issues that arise, will the Minister try to share the solutions that he intends to deliver?

Edward Davey: I will try my best to do that. Committee members will understand that this part will require secondary legislation in due course, because, once the Bill—hopefully—receives Royal Assent, we will have to get state aid clearance for the proposed pension solution. That will hopefully go extremely well and go extremely quickly, although, as we know, state aid discussions can sometimes be unnecessarily delayed.
I cannot, therefore, give the hon. Gentleman any sort of timetable for details about the solution, because there are many uncertainties and unknowns. Without going into a Rumsfeldian discussion, he will understand that we cannot undertake, during the passage of the Bill, to be absolutely clear on that, because some matters can be solved only when we have had discussions with the Commission. We certainly intend to keep the House informed of progress on those matters, because they are so critical.
When we come with the secondary legislation that is required by many of the clauses in part 2, it will get proper scrutiny—deservedly so—and when we table those secondary legislative measures, we will try to give as much information as possible, so that they can be properly scrutinised.
On that basis, I hope that the hon. Gentleman will support the clause standing part of the Bill.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17

Gordon Banks: I beg to move amendment 43, in clause17,page10,line6,at end insert—
When the Minister spoke about amendment 39, I was interested—and glad—to hear him say that he is working in co-ordination with the trustees and intends to continue to do so. Amendment 43 gives him an opportunity to put those words into action. Clause 17 allows the Secretary of State to split the RMPP into different sections. The sectionalisation of the pension, like the railway pension scheme, has nothing to do with the deficit; it is an inevitable consequence of splitting Royal Mail into different businesses. Different owners will have their own section of the RMPP. Different sections will not be able to cross-subsidise each other, and in due course one section might be amended differently from another section, so they would offer different benefits. Sectionalising the scheme means that the assets have to be split between the sections to reflect the age profiles of the different sections. In broader terms, younger sections should have a greater proportion of equities and older sections should have a greater proportion of fixed-interest securities, gilts and bonds.
The Minister, on behalf of the Secretary of State, will say that he is obliged under clause 24(1) to consult the trustee and the employers about the split, but the drive of the amendment is that consultation is not enough. We must use another C-word: “consent.” After all, it is the trustee’s not the Secretary of State’s property. The trustee, not the Secretary of State, has to manage the scheme after the sectionalisation. Surely, the trustee, and its actuary, ought to be responsible for the division, and if not, it must be at least asked for its consent to the division. The trustee owns all the assets at the moment, so if the Secretary of State proposes interfering with the trustee’s property rights through the Bill, he must obtain the trustee’s consent.
Different assets of the same asset class may have different characteristics. Shares in, say, BP may be more volatile at certain times than shares in the Royal Bank of Scotland—or perhaps not. Different shares have different volatilities. The division ought to be equal to or match the age profiles, and the trustee not the Secretary of State ought to be the judge of that. Why would the Minister want to create a mechanism in which someone other than the trustee could make or approve such a decision? If he can, will he tell the Committee why the Secretary of State should be that person?
There will be a range of technical amendments and technical discussions coming forward, which will be quite short. The fact that a discussion does not last a long time does not make it any less important. We are talking about a single word in the Bill; instead of consultation, there should be consent. The person best charged to make a decision on the split to the benefit of the beneficiaries is the trustee, with the support of the actuary. Therefore, I hope that the Minister will see the light, give me a happy weekend, and accept an amendment that is there to improve people’s lot and the scheme’s transparency. Many people within the scheme and many people who the split will affect would embrace him if he did accept it. I ask him to change “consultation” to “consent”. I await the Minister’s response.

Edward Davey: Although, of course, I take the responsibility of trying to give the hon. Gentleman a happy weekend very seriously, I take the responsibility of ensuring that this law is first class even more seriously, and I am afraid I am not able to support his amendment. It is right for trustees to be consulted, and there is provision in the Bill for that. However, amendment 43 would go further and require trustees’ consent to be given before an order can be made to divide the RMPP into sections using the powers of clause 17.
I would like to make some initial remarks and then explain why our consultation provisions are the best approach, rather than the provisions that the hon. Gentleman is seeking to add in. It is quite important that the Committee understands our intention on the sectionalisation of the Royal Mail pension plan. It is almost implied in the hon. Gentleman’s amendment that there is something afoot here, but there is not; we think that is a sensible way forward, and is in the interests of members and employees.
When we considered provisions in part 1 of the Bill, I detailed how Post Office Ltd will be separated from Royal Mail so that it is not part of a sale. The separation will need to be reflected in the continuing pension arrangements provided by the companies. I think that is almost self-evident; in separating the companies we will need to make some sort of separation in the pension arrangements. Clause 17 will allow the Government to create a separate section in the Royal Mail pension plan for Post Office Ltd. The Post Office will then become the sponsoring employer for its own section. We intend to make the two sections—the Post Office section and the Royal Mail section—completely separate. Post Office Ltd will have no exposure to the Royal Mail section and vice versa. However, the existing trustees will remain responsible for both Post Office and Royal Mail sections of the Royal Mail pension plan.
Subject to state aid approval, we intend Post Office members to be treated on an equivalent basis to Royal Mail members. That means that the historical benefits that Post Office members have, like Royal Mail members, will be transferred to the new public scheme. The member protection that applies under clause 19 will apply equally to Post Office members as to Royal Mail members. That protection will also apply to any order made under clause 17. In other words, any order to divide the Royal Mail pension plan into sections must be done in such a way that it does not leave members materially worse off after the order is made than they were before.
In developing the detail of all the proposals, the Government will work hand in glove with trustees. Indeed, we have included a commitment in the Bill—in clause 24, which we will come to shortly—to consult trustees, which means that we will consult them on the sectionalisation of the Royal Mail pension plan. However, while we consider it to be imperative to consult trustees on such elements of the pension solution, it would not be appropriate to require individual trustees of the Royal Mail pension plan to make a decision in relation to an order proposed by the Secretary of State.
That goes to the heart of the hon. Gentleman’s amendment. I think it is right that Government take responsibility for the detail of any order laid under part 2, and do not seek to put that responsibility on anyone else. This is the Government’s Bill, and the Government have to take responsibility for it. I believe that there is precedent for a consulting approach where the Government take responsibility. The Transport Act 2000, which provided for the public-private partnership of air traffic control, was part of the changes. The Civil Aviation Authority scheme was sectionalised, and the powers of the Bill mirror those in the 2000 Act, which provided for consultation with trustees of the CAA scheme before it went ahead.
Indeed, we have tried to improve part 2 of the Bill, compared with the Postal Services Bill 2009, in a number of regards. In clause 16(3), which we have discussed, there is a new provision that differs from the 2009 Bill. We are providing additional comfort to the Royal Mail pension plan trustees, by clarifying that orders under clause 16 can provide for relevant liabilities of that plan to be discharged. In other words, the trustees wanted to ensure that, once the changes were made, all their duties would have been fully discharged. We agreed with and understood that reasonable request, which was why we added the provision that was not in the 2009 Bill.
Therefore, there is a danger that if we make amendments such as amendment 43, we will go in the direction of putting responsibilities and duties back on to the trustees, which I would be surprised to see them welcome. It is important for Government to take and not to shirk such responsibilities. We will consult, but we think that we have to take responsibility for the decision and not create any legal liabilities for anyone else. For that reason, I ask the hon. Gentleman to withdraw his amendment.

Gordon Banks: I have listened closely to the Minister. It strikes me that there is some engagement with the trustees, but maybe not too much. He has not convinced me that there is anything in the amendment that would not be in the interests of the beneficiaries of the pension scheme. He recognises that consultation with the trustees is important, and also that there might be a potential area of difficulty, otherwise he would not be consulting them.
The Minister says that the decision taken should not result in any action that might make the fund worse off. Under the amendment, the judge of that decision would be the trustees, not the Secretary of State. Of course, conferring the ability to seek the consent of the trustees might, dare I say, have the same level of impact as consultation. We are not saying that the trustees must oppose anything that the Government do, when proposals are put forward. However, rather than the trustees only being consulted, they should be able to give their consent as well as to play a consultation role. If everything goes well, I have no doubt that there will be little difference between the consultation role and the consent role. As the consultation role can cause friction, we think that, as a safety net, the trustees should be given the ability to consent.
Perhaps the Bill can be improved even more than by the amendment, because both consultation and consent could be included. The Minister has not said anything that makes me think that the amendment would be detrimental. In fact, the force of the argument is that the role of consent should be added. As there are many ways that that could be done, I wish to press the amendment to a Division.

Question put, That the amendment be made.

The Committee divided: Ayes 7, Noes 10.

Question accordingly negatived.

Ordered, That further consideration be now adjourned.— (Mr Newmark.)

Adjourned till Tuesday 30 November at half-past Ten o’clock.